Lithia Motors shares closed above the $11 mark Monday as the Medford auto retailer continued its arduous climb from a precipitous 20-month fall.

Lithia Motors shares closed above the $11 mark Monday as the Medford auto retailer continued its arduous climb from a precipitous 20-month fall.

Looking back to Lithia's initial public offering 12 years ago, Chairman and Chief Executive Officer Sid DeBoer recalls he was confident at the time that his system could bridge economic cycles. While the present sustained economic downturn wasn't necessarily what he had in mind, DeBoer thinks he's made his case.

"We told people our model produced profit in any economic environment that we had ever seen — but it takes time to adjust," DeBoer said. "Going back to the 1950s, this drop-off is as bad as we've ever seen."

Lithia's stock tumbled from $31.34 a share on Feb. 8, 2007, to $1.53 on Oct. 27, 2008. After hitting the bottom, the shares bounced along at less than $4 before hitting a series of updrafts beginning in April. Lithia shares hit a high of $11.11 on Monday before closing at $11.08 — 10 months after hitting its low.

"It's reassuring to a lot of people locally that own shares," DeBoer said. "The fear of (General Motors and Chrysler) bankruptcy is gone; that was the biggest single thing. Every one of our peers are up as well."

The 230-percent gain over the past three months might not completely overshadow the sale or closure of more than 20 stores and the loss of hundreds of jobs, but it has restored investor confidence.

"We're above the moving (market) averages," DeBoer said. "A lot of people buy on momentum. We don't forecast which direction our stock could take, that's strictly market driven. But we're certainly in good shape, although we're still trading below book value — something over $12."

Lithia now has 91 stores in 13 states, including used vehicle operations in Loveland, Colo., Amarillo, Texas, and Lubbock, Texas.

"We're trying to grow each store right now," DeBoer said. "That's our best growth opportunity, to expand volume at existing stores — particularly as the market returns."

Lithia also benefitted from Chrysler's reorganization, in which weaker dealerships in competing markets were awarded to strong operations. Lithia picked-up nine franchises in Oregon, California, Montana and Washington. Another dealership in Eureka, Calif., is awaiting licensing for Lithia from the California Department of Motor Vehicles.

"We should get it any day," DeBoer said. "We're still able to do any of the Chrysler service work."

DeBoer said his company will continue making money even if the economy doesn't fully rebound in the near future.

"Retailing in the franchise system has proven its resilience to dramatic shifts and drops in sales volume," DeBoer said. "No one believed we could still be profitable with an almost 50-percent drop in new car sales volume over a two-year period. Now we're profitable at those levels. It's uphill now and, hopefully, we can only go up from here."

Reach Greg Stiles at 776-4463 or business@mailtribune.com.